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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: Bearcatbob who wrote (181865)12/31/2013 12:43:00 PM
From: zebra4o1  Read Replies (1) of 206180
 
Bob, if Wherry doesn't take it, I'll take Lightstream Resources (LTS.TO), formerly Petrobakken. They are focused on Canadian shale oil. Producing at 46,000 boepd. Market cap is $1.1 billion. Dividend now at 8%. They have very nice land positions and good net backs. But market hates their big debt: $2.1 Billion. Annual capex required to maintain current production is about $700 million. Stock has been a big loser for the last two years.

I don't see the debt as such a problem. For a capital intensive business, why not take advantage of a low interest rate environment and use bank capital instead of shareholder capital? Does make the company more brittle - more vulnerable to a new credit crunch or drop in the price of oil. But I think that risk is already priced in.
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